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Coinbase Fights States Over Prediction Market Rules
20 Dec
Summary
- Coinbase is suing states over their attempts to regulate prediction markets.
- The company argues these markets fall under federal CFTC jurisdiction.
- State regulators are trying to classify prediction markets as gambling.
Coinbase is currently engaged in legal disputes in Connecticut, Illinois, and Michigan, directly opposing state efforts to regulate its forthcoming prediction markets. The company's Chief Legal Officer stated that these markets are clearly within the jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC), not individual state gaming regulators.
Prediction markets allow users to speculate on various outcomes, from sporting events to economic decisions, by trading contracts tied to potential results. Coinbase announced its integration plans recently, prompting state gaming authorities to attempt to classify these services as a form of gambling.
Coinbase maintains that state actions to control or block these markets hinder innovation and are unlawful. The company differentiates prediction markets from casinos, emphasizing their role as neutral exchanges rather than profit-driven gambling establishments. These markets are considered derivatives, with their value contingent on future events.
